Friday, September 29, 2006

Paul Kedrosky submits: Lots of people are understandably up in arms about RBC analyst Jordan Rohan's absurdly oversized estimate of News Corp. (NWS) owned MySpace's value. In doing so, however, they are missing the point, and meanwhile encouraging more of this sort of silliness.

Like Henry Blodget during the bubble did with Amazon (AMZN), and other analysts did later with Qualcomm (QCOM), etc., putting up oversized estimates of a company's value is mostly a marketing move for a financial analyst, not an exercise in company valuation. The number doesn't matter; it is simply a piece of red meat to attact the media pack, like me saying, Tim Draper-style, that one of my portfolio companies is worth a billion dollars (which it is, of course). Come talk to me!

Pretending otherwise and writing rationally (or intemperately) about "look at me" numbers using logic, critical thinking, and financial sense is silly, like dancing about architecture. Like Mark Twain said when explaining why he doesn't vote, "It just encourages them."